InterContinental Hotels Group PLC (IHG) is into hotel operations. The company owns, franchise, manage and lease hotel. The company has its operations worldwide. The company’s main focus is to provide tailored services as per the guests’ needs to the upscale, mainstream and luxury segments of the hotel industry. Currently, the company have 5,656 hotels and 842,759 rooms under its brand name globally. The company owns brands such as Six Senses, Regent, Hotel Indigo, VOCO, Even Hotels and Holiday INN. InterContinental Hotels Group PLC is headquartered in Denham, the United Kingdom.
By 2021, IHG will open a Holiday Inn in Wagga Wagga in Australia. It would be followed by the signing of a management agreement with Australia’s Interlink Group. Holiday Inn in Wagga Wagga will be the biggest hotel in the city with 148 rooms and will be a unique addition to the brand.
Trading Updates – Q1 FY19 (1st January 2019 to 31st March 2019)
For the quarter ending 31st March 2019, the net system size of IHG increased by 5.4 per cent as compared to Q1 FY2018. Global RevPAR (revenue per available room) surged by 0.3 per cent, driven by decent growth in the US and increased market share in China. US RevPAR went up by 0.6 per cent despite tough weather conditions. In Canada, the RevPAR was up by 1 per cent, and Latin America and the Caribbean showed a 10 per cent rise. Mexico was down by 2 per cent. RevPAR growth in the UK was up by 2 per cent. The strong growth in Europe was offset by poor revenue from the Middle East and South Korea.
Financial Results and Review – FY2018 ($, million)
(Source: Annual report, Company Website)
In the Financial year 2018, InterContinental Hotels Group’s reported revenue was $4,337 million in the financial year ending December 2018, against $4,075 million in the financial year 2017. There was an increase of 6.43 per cent due to an increase in sales from all the reportable segments of the company in the current financial year. The Operating Income for FY2018 stood at $566 million against $728 million in FY 2017. There was a decrease of 22.3 per cent due to an increase in costs related to system funds and exceptional items in the current financial year. The company’s reported Profit Before Tax stood at $485 million in FY 2018 vs $656 million in FY 2017. The Profit for the Year 2018 stood at $352 million against $541 million in FY 2017. The basic EPS for FY 2018 stood at $184.7 against $279.8 in FY 2017. The company reported a diluted EPS of $182.8 in FY 2018 as compared to $278.4 in FY 2017.
Share Price Performance
Daily Chart as at May-08-19, before the market close (Source: Thomson Reuters)
On 8th May 2019, at the time of writing (before market close, GMT 02:25 PM), InterContinental Hotels Group Plc shares were trading at GBX 4,967.00, down by 0.31 per cent against its previous day closing price. Stock’s 52 weeks High and Low is GBX 5,064.84/GBX 3,861.31. The outstanding market capitalisation was around £9.05 billion and a dividend yield of 1.81 per cent.
Although the company’s revenue rose in the financial year ending 2018, the profitability margins have remained low in comparison to the last year. There had been a significant increase in the operating costs of the company in the current financial year which had impacted the profitability of the company. The Q1 trading update indicates the growth in the group’s business as revenue from the majority of geographic regions are increasing.